Chalinze Cement Company disagrees with Brela deregistration

Dar es Salaam. Chalinze Cement Company Limited said yesterday that the decision by the Business Registration and Licensing Authority (Brela) to de-register it was reached without following the due legal processes.

The company reiterated that the ongoing Tanga Cement takeover remains illegal.

The explanations by the firm’s representative, Mr Melchisedeck Lutema followed sentiments by the Industry and Trade minister, Dr Ashatu Kijaji, who told the Parliament last week that the company (Chalinze Cement) was der-egistered after it provided false information to the registrar of companies.

Winding up her ministry’s budget for the financial year 2023/24 in Parliament, Dr Kijaji cast doubt on the credibility of Chalinze Cement, which was one of the applicants that successfully blocked the Tanga Cement takeover by Scancem International DA (Scancem) through the Fair Competition Tribunal (FCT) ruling of September, 2022.

But Mr Lutema said in Dar es Salaam yesterday that the Chalinze Cement was not furnished with concrete reasons for the de-registration.

 The saga started in 2021 when Scancem International DA (Scancem), a subsidiary of Heidelberg Cement AG, which owns Tanzania Portland Cement Plc (Twiga Cement), and AfriSam Mauritius Investment Holdings Limited, owner of Tanga Cement, agreed for the former to acquire a 68.33 percent stake in Tanga Cement.

 Chalinze Cement Company Limited and the Tanzania Consumer Advocacy Society (TCAS) lodged an appeal with the FCT, which quashed the planned merger through its verdict delivered on September 23, 2022.

However, in December 2022, Scancem International applied again to the FCC in a bid to acquire Tanga Cement and the new application was approved by the FCC in February 2023.

Mr Lutema said the recent approval went against the ruling of the FCT which prohibited the takeover.

“The ruling did not give any conditions or timeline. It simply quashed it. Thus you are not allowed to continue with something that has been dismissed until you have a ruling that says otherwise,” he said.

He reiterated that if Scancem and FCC were dissatisfied with the September, 2022 ruling by the FCT, the legal process for them to follow was to apply for a review, a revision or an appeal against it.

He said Scancem and FCC should have worked on revoking the September ruling first for the second application and subsequent approval to become legally-binding.

On the legality of Chalinze Cement to block the merger, Mr Lutema said though it was true that the company was not currently producing cement, it [the company] was a potential producer and thus qualified to apply for an objection in a matter such as this one. On the de-registration and the validity of the September, 2022 ruling by the FCT, Mr Lutema said recently the March, 2023 decision to scrap the company off the books of Brela did not change anything in the eyes of the law.

“The law does operate retrospectively and therefore, whether Chalinze is de-registered or not, doesn’t change the September, 2022 ruling which has not been objected to or overruled by any legal body in Tanzania,” he said during a recent press conference.

He said it was due to the weaknesses in how the issue was handled that Chalize Cement Company Limited and TCAS decided to submit an appeal to the FCT regarding the February 28 ruling and they were still waiting for documents from the FCT for the hearing.

Yesterday’s Chalinze Cement press conference in Dar es Salaam coincided with a meeting in Dodoma where Dr Kijaji and her Finance and Planning counterpart, Dr Mwigulu Nchemba met with the management of Tanga Cement.

During the meeting, Dr Kijaji said the acquisition would boost cement production, create new jobs, and tax revenue.

Dr Nchemba said that the government's decision to approve the merger was taken with great caution and advised the Ministry of Industry and Trade to promote the investment so that it can be completed as planned.

Also present at yesterday’s press conference in Dar es Salaam was TCAS Executive Director Mr Bernard Kihiyo who said that as guardians for the wellbeing of the consumers, they were concerned about the consequences of the merger because it threatens the wellbeing of both consumers and small companies.

“With such market power, they will be able to manipulate market forces of demand and supply, control the price, and even predatory practices that would eventually kill small manufacturers,” he said.